a) What are the main properties of duration and convexity? b) Suppose the investment advisor of Commercial Bank Limited has given the bank a green light to proceed and invest $12 000 for 5 years on...

a) What are the main properties of duration and convexity?

b) Suppose the investment advisor of Commercial Bank Limited has given the bank a green light to proceed and invest $12 000 for 5 years on the capital market. Determine the present value of the bond and hence its duration and convexity if it is set to earn a coupon of 10% per annum and if the ܻܶܯ is 10% per annum. Appraise your answers.

c) Determine the change in the price of the bond if the yield rate changed from 10% to 12% per annum.